Co-Authored with Kelly McCarthy


Investors in sustainable finance and banking may have noticed a recent focus on the importance of impact measurement. A number of government initiatives are emphasizing rigorous social and environmental performance tracking, including an announcement last month from the U.S. Small Business Administration (SBA) that Impact Small Business Investment Companies (Impact SBICs) must use performance assessment systems based on the Impact Reporting and Investment Standards (IRIS) to apply for funding from the SBA’s $1 billion impact investment fund.

Others working in impact measurement have also increased their collaboration to facilitate consistent social and environmental performance data across the market. The IRIS standards recognized by the SBA are increasingly aligned with impact reporting tools and systems promoted by the Global Alliance for Banking on Values (GABV), the Global Reporting Initiative (GRI), among others, and today more than ever before, impact measurement groups are working together to ensure coordination and complementary use across sectors, regions, and platforms.

Performance metrics are available today to help investors track many areas of social or environmental benefit – such as area of land reforested, diseases/health conditions addressed, or number of suppliers who are women or live in rural regions. Increasingly, investors are seeing social and environmental data and information in performance reports. For example, Triodos Investment Management based in the Netherlands publishes an annual impact report for its sustainable trade fund that shows an annual increase of 37.4% in sustainably cultivated land and a 6.8% increase in female suppliers.[1] Similarly, the National Community Investment Fund (NCIF) reports impact metrics for community banks in the U.S. including number of female and minority board members, and number of clients who received financial education.[2]

Impact measurement is central to the practice of impact investing[3] and vital to the growth of the impact investing market. Successful impact measurement promotes the flow of capital, provides tools for investors and entrepreneurs to determine effectiveness, and maintains accountability to the intended beneficiaries. Without it, effective impact investing could not occur.

Recommendations for impact measurement were recently released by an international working group assembled by the Social Impact Investment Taskforce, a collaborative group of impact investing leaders established in 2013 under the U.K. presidency of the G8.

Impact Measurement Guidelines for Investors

To support investors and others looking to develop sound impact measurement practices, the Impact Measurement Working Group published seven guidelines based on the fundamental principle that impact measurement should help impact organizations manage performance, learn, improve outcomes and hold themselves accountable to those they aim to serve.

  • Set Goals: Articulate the difference you seek to make
  • Develop Framework & Select Metrics: Determine what metrics you will be holding yourself accountable against
  • Collect & Store Data: Collect and store the data you need to determine your progress
  • Validate Data: Validate that the data you collected is of sufficient quality
  • Analyze Data: Distill insights from the data you collected
  • Report Data: Share your progress with your key constituents
  • Make Data-Driven Investment Management Decisions:  Identify and implement ways to strengthen your investments and operations

Mainstream management and evaluation professionals will quickly recognize that these guidelines build upon best practices that align and integrate with traditional financial performance management. They apply equally at the portfolio level as well as into specific deals, and implementation is further strengthened through collaboration between investors and the enterprises they fund. To view the guidelines in full, visit

It is also important to note that the guidelines recognize and build upon successful efforts in Environmental, Social, and Governance (ESG) reporting, including those developed by GRI and the Sustainability Accounting Standards Board (SASB). In comparison, these guidelines were developed with a distinct objective to provide an additional resource that enables investors to specifically measure performance with those funds, organizations, or companies that have a business model and/or produce products and services with the express purpose to generate positive social and environmental impact.

Seizing on the growing interest in impact investing, the Working Group is optimistic that these guidelines will be immediately useful, and that the potential for widespread adoption will only increase as more investors look to have a positive impact through their portfolio activity.

A Vision for the Future of Impact Measurement

Widespread adoption of effective impact measurement by investors not only serves their interests, but also supports an evolved market in which social and environmental performance data drives capital towards the innovations most likely to address global challenges at scale.

Imagining an ideal future state of impact measurement, the Working Group collectively recognized that a successful impact measurement convention hinges on the availability of performance data that shares five key qualities. As investors build systems to support the collection and analysis of social and environmental performance data, it is important to keep these in mind so that resources for impact measurement are efficiently allocated. Specifically, investors should strive for data that is:

  • Material, i.e. featuring relevance and authority to substantively influence an investor’s assessment of an organization’s ability to create financial, societal, and environmental value and to influence portfolio, deal, or enterprise-level management decisions;
  • Reliable, i.e. sourced and validated to ensure a high standard of integrity;
  • Comparable, i.e. derived following consistent standards or practices, making it possible to compare results from different investments;
  • Additional, i.e. enables investors to assess the extent to which an investment has generated results that would otherwise not have been realized;
  • Universal, i.e. collected with methodologies that are applied consistently across markets, geographies, and sectors.

While the promise of a future market with high-quality impact data is exciting, we must recognize that the current impact measurement infrastructure and resources may not always allow for each of these qualities to be met today. Nonetheless, this should not paralyze current investor activities to develop and improve impact measurement systems.

How to Advance Impact Measurement in Your Work and for the Markets Overall

As the guidelines make clear, developing an effective impact measurement system is an ongoing process, and it is not absent challenges or the need for reconsiderations along the way. How can an investor today support a market built upon sound social and environmental performance data, while only beginning to develop a system for impact measurement? Even in the early stages of impact measurement, investors can provide important leadership by:

Embracing “impact accountability” as a common value that lies at the heart of all investments with intended positive social or environmental purpose
Evolve the field through continued learning and the advancement of a shared impact measurement agenda.

As we strive together toward a robust impact measurement convention, the value that is generated through impact measurement will be clear. Every stakeholder with an interest in contributing to societal change will have the information necessary to deploy – or facilitate the deployment of – capital toward positive impact.

Luther Ragin, the President and CEO of the Global Impact Investing Network (GIIN), and serves as the co-chair of the Impact Measurement Working Group of the Social Impact Investment Taskforce.
Kelly McCarthy is IRIS Manager at the GIIN and serves as the Secretariat of the Impact Measurement Working Group.
Melody Meyer, Associate Director of Communications at the GIIN, also contributed to this piece.

[3] Impact investments are investments made into companies, organizations, and funds with the intention to generate positive social or environmental impact alongside a financial return. Significant activity in the area of sustainable finance and banking can be considered impact investment.